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| Simon Sim is Singaporean Trader Guru, an author of best-selling book "The Joseph Cycle" |
At 22nd anniversary of PT Panin Sekuritas Tbk in Medan, our boss, Pak Darmin, invite Mr Simon Sim to attend our customer gathering party.
Mr Sim is quite a famous financial author in Singapore, with his bestselling book, The Joseph Cycle, which predicted the market quite correctly in the past years including the 2008 crash. Lucky for us, Pak Darmin asks Mr Sim to gives us a few sharing about his thought about the market, and particularly about the Joseph Cycle, and well, Mr Sim kindly accept the request :D
So, here we are, in the same room with a best selling financial author in Singapore to receive some of his precious lessons about stockmarket and The Joseph Cycle.
Here are few trading lessons and tips that been shared by Mr Sim during the session:
Master Yourself
You must know your own strength and weakness
Cut Your Losses Short
Also means that you should know your own pain level, if the trade is going down to your pain level, just dump the stock, realize that there are still plenty of days to trade in the market, don't think of the dollars and pennies, otherwise you can't cut the losses, there are always time when you can re-enter the trade and make money
Don't Be Overconfident
Stockmarket is merciless, you might feel like a king when you win, and might also feels like a chicken when you lose, but remember, professional trader's biggest loss often occur after their biggest win so, arrogant and ego do not belong in stock market.
Don't Let Your Emotion Interfere Your Trading
Emotion is dangerous in your trading life, when it's time to sell, just sell, don't let your emotion interfere your trading. Anger is very dangerous, don't trade if your motive to trade is to revenge or want to take back the money you lost. There are always next time to earn money. Keep your cool and be calm, and keep your focus to your trading goal objectively
Know When to Buy, When to Sell, and When to Do Nothing
Generally, there are 3 kinds of trends: uptrend, downtrend, and sideway. Where the best position that we took is buy on uptrend, sell on downtrend, and do nothing on sideway. Always determine the market direction before taking any action, because you must be sure of it before you entering the market, if you don't know about the market direction, then it's good to stop trading for a while
Do the Right Kind of Pyramiding
If the stock you buy is going up, the right way to average is by pyramiding, which means you buy less and less on the way up, and not more and more. That way you can get a lower average price that can protect you from losses if the stock goes down
Be Quiet When You Win and Always Ask Why When You Lose
It is important to be quiet when you win, to put your ego and pride in the proper place, and to keep asking why when you lose, because the most valuable lesson in trading always occurs when you suffer and learn from your big loss
Remember
Short term has no fundamental
Long term has no stop loss
The Joseph Cycle
Read the Cycle
1/3 of the world billionaires are Jewish, because they learn about Joseph Cycle, where they got 7 years of feast, and 7 years of famine. In other words, they knew about the cycle, they know when to expand, and when to contract. The problem by not knowing they cycle is, people tend to expand when they supposed to contract, and vice versa. Eg: when the business is good, they tend to over-expand by using loan, but when the economy is contracting, they might be defaulting, and go bankrupt. So, the ideal situation is to buy the business when the economy is contracting, and sell when it is stop expanding. But to know the cycle, you must do a lot of homework and research.
To Determine the Market Cycle
There are 7 years of feast, and 7 years of famine, such as years 2001-2008-2015-2022...
You can determine the market cycle using technical analysis and fundamental/mathematical analysis.
The fundamental analysis is use to determine the basic market trend, where as the technical analysis is use to determine the target price.
Another approach of determining the market cycle is by using the wave analysis.
Knowledge and experience is a very crucial part in determining the cycle.
A trader is like a wine, the more experience he had, the more valuable he is, that is, if he learns his experience well.
How to be Successful in Riding the Joseph Cycle ?
Patience and Discipline
Conviction
Wait for opportunity to come
Knowledge
Courage
Control of Greed and Fear
According to the Joseph Cycle, Don't get out of the stock based on the price, but by the time frame, in other words, just follow the cycle, because if we get out after let's say 50% or even 100%, we might not know if the stock is going to go to even 1000% or more
N.b: this is the case if we bought the right/inclining stocks, if the stock doesn't perform as expected, don't hesitate to cut the loss short
Supreme Trader
First of all, you need to determine the general market condition, whether it is up, down, or sideway. Then you should question yourself what you should do in order to profit from the market condition/trend.
If the market is up, how should you buy in ?
If the market is down, how should you sell out ?
For this trending market, you may buy or sell 20%, 30%, or 50% from the position that you want to establish
If the market is sideway, what should you do ?Maybe the best answer is for this is to do nothing. Don't play in the market you don't know, or if you really want to buy or sell, you can do it small, don't do it big, just play 10% of your usual position
Now, if the market is not going into the direction that we expected it to go, just sell the position. Don't hold the losing position. You can determine if you held a wrong position by looking at the chart, if it break down the trend line, then it is not performing right. The question is, how should you get out of the losing position ? The answer is quite the same, u may sell all your position, or maybe 50% of your position, or even 30% of your position, but don't do nothing ! When you are wrong, you should do something about it, and do it as soon as possible. Don't be paralyzed ! Because when you are wrong, you have to do it ASAP (As Small As Possible) don't resist the market, you cannot tell the market what to do, but you must follow the market instead
To be the supreme trader, you must overcome you DEFGH, which is: Desire, Ego, Fear, Greed, and Hope
Never average down. Because the stock that losing money is a wrong decision even from the first time you buy the stock. If the stock that you buy goes down, just exit the position, even if you still believe that the stock is performing good, just hold the stock until maximum 7% loss. Don't hope, hope has no place in stock market. When you you are losing money, just sell your position, don't hope, because it might make the wound got bigger and bigger.
You must set the flow rules to follow, it is an entry-exit strategy, where you should buy and sell, or even cut loss. Be discipline to the rules. The most dangerous part of setting a rules is when you make money by abandoning the rules, because the market might give you a one tight slap if you do not have a rule, or do not have enough discipline to follow the rules. You have to follow the rules by heart. it is better to lose money by following the rules, because when the opportunity comes, you might ended up earning big money by following the rules.
Oh yeah, an extra thanks to Pak Darmin that I got a chance to go to Brastagi with Mr Sim, that I can manage to conduct a little interview that is really informative so I can write a little more detail on this article. And on that vacation I knew that Mr Sim is really a very spiritual person, well, he write The Joseph Cycle that combining the Bible and trading, but I don't realize that until I really got to know this person. He even give me a book about Buddha during the trip ! :D
Thanks Mr Sim, it's really nice to know you :D
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